Landlords warned on protection

By failing to buy sufficient life cover, landlords are putting their estates at risk, Ying Tan has said.

The managing director of The Buy to Let Business said 80 per cent of landlords have insurance policies that fail to protect against inheritance tax or forced portfolio sales on death.

He said: “A landlord may have spent years building an estate worth millions of pounds. Upon their death, their family could face an inheritance tax bill of 40 per cent and since HM Revenue and Customs requires this to be paid within a six-month period, families often find themselves in a position where they are forced to sell some of the properties quickly, at a discount.”

Mr Tan said having buy-to-let protection in place removes that risk as the policy can be used to pay the tax bill.

He added that if policies are set up in trust, payouts are protected from inheritance tax.

“But there’s an obvious need for life cover with a residential mortgage as that person’s income is servicing the debt. On a buy-to-let deal, the rental income is servicing the debt. Buy-to-let protection is probably a ‘nice to have’ but I don’t think it’s essential.”